Florida expands school tax credit program

About a dozen states have various forms of school choice measures that help families who want their children to attend a private school or a public school district other than the one they live in.

Florida is among the leading states, with several programs. One is the Florida Tax Credit Scholarship Program. You can read the authorizing legislation here, and the basics about the program in this PDF document. In brief, companies that make donations to organizations that grant scholarships to private schools get a credit against their state taxes. The “school funding organizations” give money to low-income families, who can use the money either for private school tuition or to cover the costs of transportation to an alternative, nearby public school.

Last week, Gov. Charlie Crist signed SB2126, which expands the amount of money available in the program. The Jacksonville Observer offers a short description of the new law does for it:

The program is funded by private companies that get a corporate tax credit in return for a donation. Currently, more than 27,000 students receive a $3,950 scholarship. Under the new law, the $118 million cap expands to $140 million this year, and then allows it to expand by 25 percent whenever the donations reach 90 percent of the cap. The measure also provides additional tax credits for the program, adding oil and gas severance taxes, beverage taxes on alcohol and other types of business taxes.

The goal is to increase the amount of students who receive the scholarship and boost the individual award amount, so that it eventually reaches 80 percent of the state allocation for per pupil spending, which is currently at about $6,866 per student.

The Observer article quotes a study saying the program costs the state money–a finding consistent with critics.

Opponents of expanding the corporate tax credit vouchers argue that the program takes tax money away from public schools, while supporters say that it actually saves the state money because the amount the public schools spend per pupil is higher than the voucher tax credit. A legislative analysis of the measure predicted there would be a $31 million hit on the state budget for fiscal year 2010-2011, with a recurring impact on general revenue of $228.8 million.

After trying to find the source of this information, I found something that suggests that Observer missed a key part of the estimate:

The Revenue Estimating Conference’s estimated impact on General Revenue receipts of the additional tax credits authorized by the bill is -$31.0 million in fiscal year 2010-11 with a recurring impact on General Revenue of -$228.8 million. The bill is also expected to result in increased savings to the state as fewer students will require funding within the FEFP as the FTC program is expanded. The increased FEFP savings are expected to exceed the revenue impacts [PDF] in each of the first four years under the legislation.

Money aside, 2009 report on the program has found participating parents were very satisfied with the schooling their children received as a result. Remember, these are not country-club parents who are sending their kids off to elite prep schools on the taxpayer’s dime. These are low-income parents who are able, as a result of the scholarship, to pay in tuition only a fraction of what public schools in the state spend.

Talking with parents was a key factor for one legislator, according to the Observer:

Rep. Bill Heller, D-St. Petersburg, who was initially against the program, flipped his position over the years after learning that 78 students in his district received the scholarship and talking to them about their choice.

“If it helps whatever that little guy or gal is, that’s the bottom line for me,” Heller said.